Tax Season and Online Security: The Social Media Privacy Report

Tax season is here and the deadline to file your taxes, April 18, is rapidly approaching. This time of year normally packs some added pressure, as taxpayers must organize their financial paperwork and sit down for the dreaded conversation with their accountant. But with the new world of social media in the mix, things get even more complicated as invasions of privacy and online scams make tax time even more difficult.

The IRS and Social Media

Last year, a digital privacy advocacy organization, the Electronic Frontier Foundation (EFF), uncovered that the Justice Department and the Internal Revenue Service were both using social networking channels, such as Facebook, Twitter, LinkedIn and Myspace, during investigations.

In an article from CNNMoney.com, it was reported that the IRS can use personal information that is made readily available to the public on a social network to try and uncover tax fraud. For instance, if you are on LinkedIn, you will have all of your recent employment listed. Anyone with access to you public profile can get a good indication of how much money you made and the IRS might be cross referencing this information with your tax return.

It was also discovered that the IRS is even utilizing Google Street View to investigate taxpayers and to get a good look at their property and homes. The article quotes a member of the EFF team and his thoughts behind this use of Google Street View: “If someone says their house is worth $100,000 and the IRS looks at it on Google Street View and it’s a mansion, they could probably question that claim.”

Tax Scams Advertised on Social Networks

While the IRS may be checking up on your Facebook status to make sure it is line with what you put on your return, there are plenty of scammers using these social networks as a gateway to your hard earned dollars. Everyone likes a tax credit and donating money to a charitable donation is a great way to earn one and these scammers know that; they also know that they can reach you via Facebook’s advertising network.

As reported byPC World Magazine, scams are prevalent during this period because cybercrooks are aware that most Americans are scrambling to get their returns in. If you are such a person, we recommend that you ignore any ads you see on Facebook about tax credits or donating to a charity.

The most timely scam floating about the social networks is using the recent Japan earthquake to get into people’s wallets. Last year, after the earthquake in Haiti, Congress passed the Haiti Assistance Income Tax Incentive Act, meaning that if a taxpayer contributed to the relief effort they could claim it on their return. Such a law has not been passed in regards to the Japan earthquake. Yet, many scammers are trying to attract victims on social networks.

If you see an ad or receive an email asking you donate to the Japan relief effort or any other natural disaster, please consult IRS.gov before you click and give your credit card information. At the site you can learn more about how to make tax-deductible donations safely and properly.

Whether you are sharing information on a social network or just seeing an ad on one of these sites, you must always have your guard up. Especially during tax season, it is clear that your Internet privacy and online security are in danger.

Do you think the IRS is going too far using Facebook and other sites to check up on taxpayers in order to prevent fraud?

Have you ever clicked on these scam advertisements? Would you be able to tell the real thing from a fake?

Jillian Ryan is PRIVATE WiFi's Director, Brand Communications and Social Strategy. With a passion for writing, the web, and fast-paced information exchanged via social networks, Jillian is also concerned about the ramifications of putting your life details and personal data into cyberspace. Follow her on Twitter: @Writing_Jillian.